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DECREE No

DECREE No. 48/2001/ND-CP OF AUGUST 13, 2001 ON ORGANIZATION AND OPERATION OF THE PEOPLE�S CREDIT FUNDS

THE GOVERNMENT

Pursuant to the September 30, 1992 Law on Organization of the Government;

Pursuant to the December 12, 1997 Law No. 02/1997/QH10 on Credit Institutions;

Pursuant to the April 3, 1996 Law No. 47/L/CTN on Cooperatives;

At the proposal of the Vietnam State Bank Governor,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Regulation scope

This Decree prescribes the organization and operation of local People�s Credit Funds and the central People�s Credit Fund (hereinafter referred collectively to as the People�s Credit Funds).

Article 2.- The characters and objectives of the operation of the People�s Credit Funds

The People�s Credit Fund is a form of cooperative credit organization operating according to the principle of voluntariness, autonomy and self-responsibility for its operation results, attaining the main objective of mutual assistance among members in order to bring into full play the strength of the collective and each member in effectively carrying out production, business and service activities and raising the living standards. The operation of the People�s Credit Fund must ensure self-financing and accumulation for development.

Article 3.- Local People�s Credit Funds

The local People�s Credit Funds are cooperative credit organizations established by members in the localities voluntarily and operating according to the provisions of this Decree with the principal aim of mutual assistance among members.

Article 4.- The central People�s Credit Fund

The central People�s Credit Fund is a cooperative credit organization jointly set up by the local People�s Credit Funds with a view to supporting and raising the efficiency of the operation of the entire system of the People�s Credit Funds.

To support the system of the People�s Credit Funds, credit institutions and other subjects may participate in contributing capital to the central People�s Credit Fund under the guidance of Vietnam State Bank (hereinafter called the State Bank).

Article 5.- The principles for organization and operation of the People�s Credit Fund

1. To voluntarily join and leave the People�s Credit Funds: All Vietnamese citizens, family households and other subjects, that meet all conditions as provided for in Article 21 of this Decree may become members of People�s Credit Funds; the members may leave the People�s Credit Funds as provided for in the Charters of the People�s Credit Funds.

2. Democratic management and equality: The People�s Credit Fund members are entitled to participate in the management, inspection and supervision of People�s Credit Funds and have the equal right in voting.

3. Self-responsibility and mutual benefit: The People�s Credit Funds take self-responsibility for their operation results; decide by themselves the distribution of income, ensuring that the People�s Credit Funds and their members have mutual benefits.

4. Profit- sharing ensures the combination between the members� interests and the People�s Credit Funds� development: After fulfilling the tax obligations, a part of the remaining profit shall be deducted for various funds of the People�s Credit Funds, another part shall be divided to members according to their capital contribution percentages and the remainder shall be divided to members according to the extent of using services of the People�s Credit Funds decided by the members� congresses.

5. Community cooperation and development: Members must promote the collective spirit, raise the sense of cooperation in the People�s Credit Funds and the social community, cooperation among People�s Credit Funds at home and abroad according to the provisions of law.

Article 6.- Minimum number of members

The number of a People�s Credit Fund�s members is not limited but the minimum number must be 30.

Article 7.- Rights of the People�s Credit Funds

1. To mobilize capital, lend capital and provide other banking services according to their operation licenses; to be autonomous in business and self-responsible for their operation results.

2. To receive support capital from the State, organizations and individuals at home and abroad.

3. To request borrowers to supply documents on finance, production and/or business activities related to the borrowed sums.

4. To recruit, employ and train laborers, to select forms of wage and bonus payment and to exercise other employer�s rights according to the provisions of law.

5. To admit new members, settle members� application to leave the People�s Credit Funds, to expel members according to the provisions of the Charters of the People�s Credit Funds.

6. To decide the income distribution and handle losses according to law provisions and the Charters of the People�s Credit Funds.

7. To decide the rewarding and sanctioning of members.

8. To reject organizations� and/or individuals� requests which are contrary to the provisions of law.

9. To exercise other relevant rights as provided for by law.

Article 8.- The obligations of the People�s Credit Funds

1. To conduct business activities according to granted licenses; to abide by the State�s regulations on money, credit and banking services.

2. To observe the Ordinance on Accountancy and Statistics and the regime of inspection and auditing according to the provisions in Articles 58 and 59 of this Decree.

3. To preserve and develop working capital of the People�s Credit Funds; to effectively manage and use the assigned property.

4. To repay deposits, borrowed sums and other debts on time; to be liable for debts and other obligations with the entire capital and property under the ownership of the People�s Credit Funds.

5. To pay taxes as prescribed by law.

6. To join in associated organizations for development of the system with a view to achieving the objective of building the People�s Credit Funds and the entire system of People�s Credit Funds in a safe, effective and sustainable manner.

7. To care for education, training and training to raise professional skills, to supply information so that all members actively participate in building and managing the People�s Credit Funds.

8. To protect the members� interests and fulfill all economic commitments to members.

9. To effect labor contracts, to respect the honor and dignity of laborers.

Article 9.- Association among People�s Credit Funds

1. The People�s Credit Funds are associated with one another to:

a) Unify and coordinate activities for the objective of cooperation and assistance among members;

b) Ensure the safety and development of each People�s Credit Fund and the entire system through the following works: capital regulation; building of safety fund for the People�s Credit Fund system; personnel training; organization of auditing; mutual exchange of information, experiences and consultancy on professional administration, organization and management.

2. The People�s Credit Funds may establish associated organizations for system development. The functions, tasks, powers, organizational structure, appellation and finance shall be defined in the Charters of the joint organizations and must be approved by the State Bank Governor. When the conditions for setting up associated organizations for the development of the People�s Credit Fund system are not yet fully met, the State Bank shall guide the implementation of the contents of association stipulated in Clause 1 of this Article.

Article 10.- The State�s policies towards People�s Credit Funds

The State protects the ownership, legitimate rights and interests of the People�s Credit Funds, ensures the People�s Credit Funds� right to equality in activities; promulgates legal documents and adopts policies to encourage the development of People�s Credit Funds; implements through the People�s Credit Funds policies of assisting and supporting members in hunger eradication and poverty alleviation, achieve equality, social justice and progress. The State respects the People�s Credit Funds� autonomy and self-responsibility in their activities, without interfering with their management and lawful operations.

Chapter II

ESTABLISHMENT AND BUSINESS REGISTRATION

Article 11.- Founding members

1. Founding members are those who initiate the establishment of People�s Credit Funds and join the local People�s Credit Funds.

2. Founding members of the local People�s Credit Funds must report in writing to the competent People�s Committees prescribed in Articles 67 and 68 of this Decree on their intention to set up local People�s Credit Funds as well as orientations, programs and plans for their operations.

3. After getting the written approval of the People�s Committees, the founding members shall proceed with:

a) The drafting of Charters;

b) The elaboration of operation orientation;

c) The organization of propagation and mobilization;

d) Preparation of other work for organizing the founding conference;

4. For the central People�s Credit Fund, there shall be separate regulations.

Article 12.- Founding conference

1. The conference on founding of a People�s Credit Fund shall be organized by its founding members. It shall be participated by the founding members and individuals as well as organizations that wish to become members of the People�s Credit Fund.

2. The conference shall discuss and vote by majority on the following issues:

a) The adoption of the list of members;

b) The adoption of the name and symbol of the People�s Credit Fund;

c) The adoption of the draft Charter and operation regulations of the People�s Credit Fund;

d) The adoption of charter capital level of the People�s Credit Fund, the members� contributed capital levels;

e) The adoption of operation plan;

f) The election of the Managing Board, the Control Board;

g) The adoption of the minutes of the founding conference of the People�s Credit Fund.

Article 13.- Charters of the People�s Credit Funds

1. Each People�s Credit Fund has its own charter. The charters of the People�s Credit Funds must conform to the provisions of the Law on Credit Institutions, the Law on Cooperatives and other provisions of law.

2. A charter of a People�s Credit Fund must contain the following major contents:

a) The People�s Credit Fund�s name and head-office location;

b) Its operation contents and scope;

c) Its operation duration;

d) Its charter capital and mode of capital contribution;

e) Its organizational structure; tasks and powers of its Managing Board, general director (director) and Control Board;

f) Procedures for organizing the members� congress and adopting the decisions of the members� congress;

g) Rights and obligations of members;

h) The financial, accounting, inspecting and internal-auditing principles;

i) Cases of and procedures for division, separation, consolidation, merger, repurchase, dissolution, bankruptcy;

j) Procedures for charter amendment.

3. The charters of the People�s Credit Funds may be materialized only after they are approved by the State Bank.

Article 14.- Conditions for being granted establishment and operation licenses

1. Having demand for banking operations in localities where the operation is being applied for; having got the local administration�s approval of the establishment of People�s Credit Fund.

2. Having legal capital as provided for by the Government.

3. Founding members being organizations and/or individuals have prestige and financial capability.

4. The administrators and managers have full civil act capacity and meet all criteria on morality, educational level, professional capability under the regulations of the State Bank.

5. Having organization and operation charters in accordance with the provisions in Article 13 of this Decree.

6. Having feasible operation plans.

Article 15.- Granting of establishment and operation licenses

1. A dossier of application for an establishment and operation license shall include:

a) The application for an establishment and operation license;

b) The minutes of the conference on founding of the People�s Credit Fund;

c) The draft charter of the People�s Credit Fund, which has been adopted at the founding conference;

d) The operation plan for the first three years;

e) The lists and curricula vitae of the founding members, Managing Board members, Control Board members and the general director (director) as well as diplomas proving their professional capability and skills;

f) The contributed capital level, capital contribution plan and list of capital-contributing members;

g) The written proposal of the commune, ward or district capital People�s Committee, which has been approved by the district, provincial capital or town People�s Committee on the founding and headquartering of the People�s Credit Fund (for local People�s Credit Funds); the provincial/ municipal People�s Committee�s written approval of the location for the headquarter of the central People�s Credit Fund (for the central People�s Credit Fund).

2. The stipulations on competence to grant establishment and operation licenses; the licensing time limits, the licensing fees, the use of license; the operation conditions, the withdrawal of licenses of People�s Credit Funds shall comply with the provisions of the Law on Credit Institutions and of the State Bank.

Article 16.- Business registration

After being granted establishment and operation licenses, the People�s Credit Funds must proceed with business registration at the provincial/municipal business registration offices.

Article 17.- Changes which must be approved

1. A People�s Credit Fund must obtain the State Bank�s approval before changing one of the following points:

a) The name of the People�s Credit Fund;

b) The increase or decrease of its charter capital in excess of the limits prescribed by the State Bank;

c) The locations of its head-office, transaction bureau(s), branch(es), representative office(s);

d) Operation contents and scope;

e) The Managing Board members, the Control Board members and the general director (director).

2. After getting the State Bank�s approval, the People�s Credit Funds must register with the business registration certificate- granting bodies the changes prescribed in Clause 1 of this Article.

Article 18.- The legal person status of the People�s Credit Funds

The People�s Credit Funds have the legal person status, their own charter capital and seals; conduct independent economic accounting and take responsibility before their members and law for their operations.

The People�s Credit Funds shall have their legal person status as from the date of being granted the business registration certificates.

Article 19.- Opening of transaction bureaus, branches and/or representative offices

1. The central People�s Credit Fund may open its transaction bureaus, branches and/or representative offices in necessary localities where exist operation demands after getting the State Bank�s written approval.

2. The dossiers and procedures of application for the opening of transaction bureaus, branches and/or representative offices of the central People�s Credit Fund shall comply with the regulations of the State Bank.

Article 20.- Division, separation, consolidation, merger, repurchase, dissolution

The division, separation, consolidation, merger, repurchase and dissolution of People�s Credit Funds must be approved in writing by the State Bank and comply with the provisions of law.

Chapter III

MEMBERS

Article 21.- Membership conditions

1. Members of the local People�s Credit Funds may include:

a) Vietnamese citizens aged 18 or older, having full civil act capacity and lawfully residing in geographical areas of operation of local People�s Credit Funds;

b) Family household representatives who have all conditions and criteria to be members of local People�s Credit Funds;

c) Other subjects prescribed by the State Bank Governor.

2. Members of the central People�s Credit Fund may include:

a) The local People�s Credit Funds;

b) The credit institutions;

c) Other subjects prescribed by the State Bank Governor.

3. The subjects prescribed in Clauses 1 and 2 of this Article, who voluntarily join People�s Credit Funds, approve their charters, fully contribute capital may become members of the People�s Credit Funds.

Article 22.- Rights of members

1. To attend the members� congresses or elect delegates to the members congresses, to attend the members� meetings to discuss and vote on affairs of the People�s Credit Funds.

2. To stand for the election and be elected to the Managing Boards, the Control Boards and other elective positions of the People�s Credit Funds.

3. To deposit money, borrow capital, enjoy profit division according to their contributed capital proportion.

4. To enjoy the common social welfare of the People�s Credit Funds under the provisions of law.

5. To be commended and/or rewarded when making many contributions to the building and development of the People�s Credit Funds.

6. To be provided with necessary information related to activities of the People�s Credit Funds.

7. To make proposals, reports and/or recommendations on matters related to activities of the People�s Credit Funds and to request the answers therefor; to request the Managing Boards, the Control Boards to convene extraordinary members� congresses to settle urgent issues.

8. To transfer their own contributed capital and interests as well as obligations to other persons according to the provisions of law and the Charters of the People�s Credit Funds.

9. To leave the People�s Credit Funds according to the provisions of the Charters of the People�s Credit Funds.

10. To be refunded with their contributed capital and other interests when leaving the People�s Credit Funds according to the provisions in Article 24 of this Decree. In cases where members die, their contributed capital and other interests as well as obligations shall be settled according to the law provisions on inheritance.

Article 23.- Obligations of members

1. To abide by the charters of their People�s Credit Funds and resolutions of the members� congresses.

2. To contribute capital according to the charters; the maximum level of contributed capital of each member including capital transferred from others in each period shall be stipulated by the State Bank Governor, but must not exceed 30% (thirty percent) of the total charter capital of the People�s Credit Funds at the time of capital contribution and receipt of transferred capital.

3. To cooperate with and assist one another, contributing to building and further development of the People�s Credit Funds.

4. To jointly bear responsibility for the risks and losses suffered by the People�s Credit Funds within the limit of their contributed capital.

5. To return the borrowed capital, both the principal and the interest, to the People�s Credit Funds as committed.

6. To compensate for damage caused by themselves to the People�s Credit Funds according to the provisions of the Charters and the decisions of the members� congresses.

Article 24.- Membership termination

1. The People�s Credit Fund membership shall terminate in the following cases where:

a) Members being individuals die or lose their civil act capacity;

b) Members are permitted to leave the People�s Credit Funds according to the provisions of the Charters;

c) Members being organizations dissolve or go bankrupt;

d) Members are expelled by the members� congresses;

e) Members have fully transferred their capital and other interests as well as obligations to other persons;

f) Other cases prescribed by the Charters of the People�s Credit Funds.

2. When having their membership terminated, members may assign their contributed capital and other interests as well as obligations to other persons. In cases prescribed at Points a, c and d of Clause 1 of this Article where their contributed capital cannot be transferred to other persons, members shall be refunded with their contributed capital. The return of contributed capital must be based on the following factors:

a) The present financial status of the People�s Credit Fund;

b) The members� financial obligations towards the People�s Credit Funds have been completely handled.

Chapter IV

ORGANIZATION AND MANAGEMENT OF PEOPLE�S CREDIT FUNDS

Article 25.- Members� congresses

The provisions on members� congresses, the number of delegates and voting at the congresses, the notices on convening the congresses shall comply with the provisions of the Law on Cooperatives and other law provisions.

Article 26.- The agenda of members� congresses

The members� congresses shall discuss and decide on the following matters:

1. The reports on operation results in the year, reports on activities of the Managing Boards and the Control Boards.

2. The public financial and accounting reports, the planned distribution of profits and handling of losses (if any).

3. The business operation orientation for the coming year.

4. Charter capital increase or reduction; members� capital contribution levels.

5. The election, supplementary election or dismissal of chairmen and/or members of the Managing Board, members of the Control Boards, of the People�s Credit Funds.

6. The adoption of plans elaborated by the Managing Boards on the levels of allowances for members of the Managing Boards and the Control Boards, the wage levels for the general directors (directors) and personnel working at the People�s Credit Funds.

7. The adoption of the lists of members to be newly admitted and members to leave the People�s Credit Funds, reported by the Managing Boards; the decisions on expulsion of members.

8. The division, separation, consolidation, merger, repurchase and/or dissolution of the People�s Credit Funds.

9. The amendment of the Charters of the People�s Credit Funds.

10. Other matters proposed by the Managing Boards, the Control Boards or at least 1/3 (one third) of the total members.

Article 27.- Ratification of positions and titles

The chairmen and other members of the Managing Boards, the heads and other members of the Control Boards, the directors of the local People�s Credit Funds, the general director of the central People�s Credit Fund (hereafter referred collectively to as the directors) must be approved by the State Bank Governor or under his/her authorization.

Article 28.- The Managing Board

1. A Managing Board has the function of administering the People�s Credit Fund according to the provisions of law.

2. The number of the Managing Board members shall be decided by the members� congress, but must be at least three. The chairman and other members of the Managing Board shall be elected directly by the founding conference or the members� congress by mode of secret ballots.

3. The Managing Board members must be the People�s Credit Fund members who have good morality, prestige, managerial capacity and knowledge about banking operation. The Managing Board members must not concurrently be the Control Board members, chief accountant, cashier of the People�s Credit Fund and such persons must not be their father, mother, spouse, offspring or siblings.

4. The Managing Board�s term shall be stipulated by the members� congress, which, however, must be at least 2 years and not exceed 5 years.

5. The Managing Board shall take responsibility for its decisions before the members� congress and before law.

6. The chairman and other members of the Managing Board must not authorize persons who are not members of the Managing Board to perform their tasks and/or exercise their powers.

Article 29.- Tasks and powers of the Managing Board

1. To organize the implementation of the resolutions of the members� congresses.

2. To decide on issues regarding the organization and operation of the People�s Credit Fund (except for matters falling under the jurisdiction of the members� congress).

3. To appoint, dismiss the director, deputy director, chief accountant; to decide on the number of laborers, organizational structure and professional sections of the People�s Credit Fund.

4. To prepare agenda of the members� congresses and convene the members� congresses.

5. To draw up plans on the levels of remuneration for members of the Managing Board and the Control Board, the wage levels for the director and employees working at the People�s Credit Fund and submit them to the members� congresses.

6. To consider the admission of new members, to settle members� application for the exit from the People�s Credit Fund (except cases of expulsion of members) and report them to the members� congresses for adoption.

7. To handle irrecoverable loans and other losses according to the State�s regulations.

8. To perform other tasks and powers as prescribed by law and the Charter of the People�s Credit Fund.

Article 30.- Managing Board chairman

1. The Managing Board chairman is the People�s Credit Fund�s representative at law.

2. The chairman of the central People�s Credit Fund must not be concurrently the general director of the central People�s Credit Fund. The chairmen of the Managing Boards of the local People�s Credit Funds can be concurrently the directors of such local People�s Credit Funds as provided for by the State Bank.

3. The Managing Board chairman must not concurrently participate in the Managing Board or join in the administration of another credit institution; particularly the chairmen of the Managing Boards of the local People�s Credit Funds can join the Managing Board of the central People�s Credit Fund.

4. The Managing Board chairman is the person who organizes the performance of the tasks of the Managing Board as provided for in Article 29 of this Decree; convenes and presides over the Managing Board�s meetings; assigns the Managing Board members to implement the resolutions of the members� congresses and decisions of the Managing Board and oversees the implementation thereof; urges and supervises the administration of the People�s Credit Fund by its director.

Article 31.- The Control Board

1. The Control Board is responsible for supervising and inspecting all activities of the People�s Credit Fund according to law and the Charter of the People�s Credit Fund.

2. The Control Board is elected directly by the members� congress. In principle, the Control Board has at least 3 persons, at least one of them must be the full-time controller. The Control Board elects its head to administer its activities. For small-sized local People�s Credit Funds, they may elect only one full-time controller under the guidance of the State Bank. The Control Board�s term shall be same as the term of the Managing Board.

3. The Control Board members must satisfy all requirements on professional qualifications and ethics set by the State Bank.

4. The Control Board members must not concurrently be Managing Board members, chief accountant, cashier of the People�s Credit Fund and must not be their parents, mother, spouse, offspring or siblings.

Article 32.- Tasks and powers of the Control Board

1. To inspect and supervise the People�s Credit Fund�s operation according to law.

2. To inspect and supervise the observance of the Charter of the People�s Credit Fund, the resolutions of the members� congresses and the resolutions of the Managing Board.

3. To inspect financial and accounting matters, income distribution, handling of loss amounts, the use of funds of the People�s Credit Fund, the use of property and other supports of the State.

4. To receive and settle complaints and denunciations related to activities of the People�s Credit Fund, which fall under its jurisdiction.

5. Its head or his/her representative may attend the Managing Board�s meetings but shall not participate in voting.

6. To request concerned persons in the People�s Credit Fund to supply documents, books, vouchers and other necessary information in service of the inspection, but not to use such documents and information for other purposes.

7. To use the system of inspection and internal audit (if any) of the People�s Credit Fund for the performance of its tasks.

8. To prepare the agenda of and convene members� extraordinary congresses in the following cases where:

a) The Managing Board fails to redress or has fruitlessly redressed the violations of law, Charter and resolutions of the members� congress as requested by the Control Board;

b) The Managing Board fails to convene the members� extraordinary congress at the request of members prescribed in Clause 4, Article 26 of the Law on Cooperatives.

9. To notify the Managing Board of, and report before the members� congress as well as the State Bank on, the control results; to propose to the Managing Board and/or director the remedies of weaknesses, shortcomings as well as violations in the operation of the People�s Credit Fund.

Article 33.- Director

1. The director of a People�s Credit Fund shall be appointed by its Managing Board.

2. The director of a People�s Credit Fund is the person held accountable before the Managing Board for administering the daily activities according to his/her assigned tasks and powers.

3. The director of a People�s Credit Fund must have good morality, professional qualifications and managerial capacity as provided for by the State Bank.

4. When absent, the director may authorize his deputy or a Managing Board member to run affairs of the People�s Credit Fund; the authorized person must not re-authorize another person.

Article 34.- Tasks and powers of directors

1. To administer all activities of the People�s Credit Fund strictly according to law, Charter and resolutions of the members� congresses, resolutions of the Managing Board.

2. To select and propose the Managing Board to appoint or dismiss deputy director (if any), chief accountant.

3. To recruit, discipline and dismiss employees working at the People�s Credit Fund.

4. To sign reports, documents, contracts and vouchers; to submit to the Managing Board the reports on the situation and results of operations of the People�s Credit Fund.

5. The director being not member of the Managing Board can attend meetings of the Managing Board but has no right to vote.

6. To prepare operation reports, final settlement reports, the projected profit distribution, loss-handling plans, plans on handling risks (if any) and draw up operation orientation for the coming year for consideration by the Managing Board and submission to the members� congresses.

7. To decline to execute decisions of the chairman or members of the Managing Board if deeming that such decisions are contrary to law, to the Charter and/or resolutions of the members� congresses; and immediately report them to the State Bank for handling measures.

Article 35.- Persons who must not be members of the Managing Board or Control Board, executives

1. The following persons must not be elected to the Managing Board or the Control Board or appointed to the post of director, deputy director (if any):

a) Persons who are being examined for penal liability;

b) Persons who have been sentenced for serious offenses of infringing upon the national security, the socialist ownership and citizens� property; serious economic crimes;

c) Persons who have been sentenced for other crimes and the judgments have not yet been written off;

d) Persons who were once the Managing Board members or directors of organizations which have gone bankrupt, except cases prescribed in Clause 2, Article 50 of the Law on Enterprise Bankruptcy;

e) Persons who were once representatives at law of organizations which have been suspended from operation due to their serious law violations.

2. Parents, spouses, offspring and siblings of the Managing Board members or directors must not be the Control Board members, chief accountant of the same People�s Credit Fund.

Article 36.- Inspection, internal audit

The inspection and internal audit of the People�s Credit Fund shall comply with the provisions in Section 4, Chapter II of the Law on Credit Institutions and other law provisions.

Chapter V

OPERATION OF LOCAL PEOPLE�S CREDIT FUNDS

Section 1. OPERATION OF LOCAL PEOPLE�S CREDIT FUNDS

Article 37.- Capital mobilization

1. The local People�s Credit Funds may take demand and time deposits of their members and non-members.

2. The local People�s Credit Funds may borrow capital from the central People�s Credit Fund and credit institutions other than the People�s Credit Funds according to the regulations of the State Bank.

Article 38.- Credit activities

1. The local People�s Credit Funds provide loans to their members and non-members being poor households in their operation areas. The provision of loans to poor households shall comply with the Charters of the People�s Credit Funds, but the debit balance of loans provided for poor households against the total debit balance must not exceed the percentages prescribed by the State Bank Governor. The local People�s Credit Funds may provide loans to customers who deposit their money at the People�s Credit Funds in form of mortgage of the deposit books issued by such local People�s Credit Funds.

2. The compilation of dossiers and procedures for loan provision, loan consideration and approval, the examination of loan use, the loan termination, debt handling, adjustment of interest rates and the keeping of dossiers by the local People�s Credit Funds must comply with the regulations of the State Bank.

3. The local People�s Credit Funds shall conduct other credit activities according to the regulations of the State Bank.

Article 39.- Payment and treasury services

1. The local People�s Credit Funds may open deposit accounts at the State Bank, the central People�s Credit Fund and other credit institutions (except other local People�s Credit Funds).

2. The local People�s Credit Funds may provide payment and treasury services, mainly for their members.

Article 40.- Other activities

1. The local People�s Credit Funds may use their charter capital and reserve funds for capital contribution to the central People�s Credit Fund and the associated organizations for system development.

2. The local People�s Credit Funds may undertake the entrustment and act as agents in the field of monetary activities under the guidance of the State Bank.

3. The local People�s Credit Funds may carry out other activities when so permitted by the State Bank.

Section 2. OPERATION OF THE CENTRAL PEOPLE�S CREDIT FUND

Article 41.- Capital mobilization

1. The central People�s Credit Fund may take deposits of its members and other organizations as well as individuals in forms of demand deposit, time deposit and other types of deposit.

2. The central People�s Credit Fund can issue deposit certificates, bonds and other valuable papers to mobilize capital when so permitted by the State Bank Governor.

3. The central People�s Credit Fund may borrow capital on the domestic monetary markets and borrow capital from foreign credit institutions according to the regulations of the State Bank.

4. The central People�s Credit Fund may borrow capital from the State Bank according to the current regulations.

5. The central People�s Credit Fund may apply other forms of capital mobilization when so permitted by the State Bank Governor.

Article 42.- Credit activities

1. The central People�s Credit Fund provides loans mainly for its members; the provision of loans for subjects being non-members shall comply with the Charter of the central People�s Credit Fund and the loan amounts must not exceed the maximum percentage prescribed by the State Bank Governor.

2. The central People�s Credit Fund may carry out operations of discount, rediscount, pledge of commercial bills and other short-term valuable papers; provide bank guarantee and other credit forms according to the regulations of the State Bank, mainly in the relations with its members.

3. The compilation of dossiers and procedures for loan provision, loan consideration and approval, examination of loan use, loan termination, debt handling, debt adjustment, interest rate adjustment and dossier keeping by the central People�s Credit Fund must comply with the current regulations.

Article 43.- Payment and treasury services

1. The central People�s Credit Fund may open accounts at the State Bank and other credit institutions.

2. The central People�s Credit Fund may provide the following payment services, mainly for its members:

a) Supply of payment instruments;

b) Domestic payment services for customers;

c) Undertaking entrusted collection and entrusted spending;

d) Other payment services stipulated by the State Bank.

3. The central People�s Credit Fund may provide cash collection and payment services for customers.

Article 44.- Other activities

1. The central People�s Credit Fund may use its charter capital and reserve fund for capital contribution to associated organizations for system development.

2. The central People�s Credit Fund may participate in the monetary markets organized by the State Bank, including the treasury bond auction market, the inter-bank domestic and foreign currency market, the market for other short-term valuable papers; may deal in foreign exchange when so permitted by the State Bank; may entrust and take entrustment, act as agents in fields related to banking operation.

3. The central People�s Credit Fund may provide consultancy service and other services related to banking operation under the regulations of the State Bank.

Section 3. RESTRICTIONS TO ENSURE SAFETY FOR OPERATION OF THE PEOPLE�S CREDIT FUNDS

Article 45.- Cases where loans must not be provided

The local People�s Credit Funds must not directly provide loans to, and deposit capital for, each other; must not provide loans to subjects other than those prescribed in Clause 1, Article 38 of this Decree.

Article 46.- Credit restrictions

1. The local People�s Credit Funds must not provide preferential loans to members of the Managing Board or the Control Board, the director, deputy director and personnel working at the local People�s Credit Funds as well as members being their parents, spouses and offspring.

2. The central People�s Credit Fund must not provide non-guaranteed loans, preferential loans to the following subjects:

a) Auditing organizations, auditors, that are conducting auditing at the Fund, and inspectors;

b) Enterprises with one of the subjects prescribed in Clause 1, Article 77 of the Law on Credit Institutions owning more than 10% of the charter capital of such enterprises.

Article 47.- Lending limits

1. The total debit balance of loans provided to customers must not exceed 15% of a People�s Credit Fund�s own capital; this limit does not apply to loans from entrusted capital sources of other organizations and individuals and loans pledged from the deposit books issued by such People�s Credit Fund itself.

2. Particularly for the central People�s Credit Fund, if the customers� demand for loan capital exceeds the prescribed 15% of its own capital, the central People�s Credit Fund may provide loans according to the regulations of the State Bank.

Article 48.- Capital contribution limits

The capital contribution levels of the local People�s Credit Funds and the central People�s Credit Fund in Clause 1 of Article 40 and Clause 1 of Article 44 of this Decree shall be stipulated by the State Bank.

Article 49.- Safety guarantee and risk reserve percentages

The percentages of safety guarantee and risk reserve of the People�s Credit Funds shall comply with the Law on Credit Institutions and the guidance of the State Bank

Article 50.- Deposit security and system organization

1. The People�s Credit Funds have the responsibility to participate in the deposit insurance according to the current regulations.

2. The People�s Credit Funds may participate in the Safety Fund of the entire People�s Credit Fund system under the regulations of the State Bank.

3. The deposit insurance premium levels shall comply with the regulations of the Government. The fee levels for participation in the Safety Fund of the entire People�s Credit Fund system shall be stipulated by the State Bank Governor after obtaining the opinions of the Finance Minister. The People�s Credit Funds may account such fee amounts into their operation expenditure.

Chapter VI

FINANCE, ACCOUNTING, REPORTING AND INFORMATION AND CONFIDENTIALITY

Article 51.- Charter capital

1. The charter capital of a local People�s Credit Fund is the total capital amount contributed by its members and recorded in its Charter, at least being equal to the legal capital level set by the Government. The minimum and maximum capital level for a member shall be decided by the members� congress according to the regulations of the State Bank.

2. The charter capital of the central People�s Credit Fund is the total capital amount contributed by its members and recorded in its Charter, at least being equal to the legal capital level set by the Government.

The Government�s support capital for the People�s Credit Fund system shall be accounted into the charter capital of the central People�s Credit Fund; the Government assigns the State Bank to manage this capital amount.

Article 52.- Financial revenue and expenditure and various funds

1. The People�s Credit Funds observe the regime of financial revenue and expenditure prescribed by law. The Finance Minister shall guide the application of the financial regime to the People�s Credit Funds to suit the form of cooperative economy.

2. Annually, the People�s Credit Funds must deduct part of their after-tax profits for setting up and maintaining various funds according to the provisions of law.

Article 53.- Fiscal year

The fiscal year of the People�s Credit Funds commences on January 1 and ends on December 31 of the calendar year.

Article 54.- Accounting

The People�s Credit Funds must conduct accounting according to the book-keeping account system and voucher regime as provided for by the legislation on accounting, statistics and the guidance of the State Bank.

Article 55.- Purchase of, investment in, fixed assets

The People�s Credit Funds may purchase and/or invest in fixed assets used directly for professional activities at the rates prescribed by the State Bank Government, which, however, must not exceed 50% of their own capital.

Article 56.- Reporting

1. The People�s Credit Funds must observe the regime of financial reporting according to the law provisions on accounting, statistics and periodically reporting on their professional activities according to the regulations of the State Bank Governor.

2. Apart from the periodical reports, the People�s Credit Funds have the responsibility to immediately report to the State Bank on the following cases where:

a) Overdue debts exceed the prescribed percentages and tend to rise;

b) Members withdraw their capitals which represent more than 30% of the charter capital or the capital withdrawal by members makes the charter capital of the People�s Credit Fund lower than the legal capital;

c) Customers withdraw their deposits which represent more than 30% of the total deposit balance, making the People�s Credit Fund in the danger of losing its solvency;

d) Other abnormal developments in organization and/or operation, which may seriously affect the operation situation of the People�s Credit Fund.

3. Within 90 days as from the end of the fiscal year, the People�s Credit Funds must send to the State Bank their annual reports as provided for by law.

Article 57.- Information and confidentiality

The People�s Credit Funds must strictly observe the regime of information for account holders, information exchange between credit institutions, information exchange between the State Bank and credit institutions, and banking information confidentiality according to the regulations of the State Bank and other provisions of law.

Chapter VII

BANK INSPECTORATE, AUDITING, SPECIAL CONTROL, BANKRUPTCY, DISSOLUTION, LIQUIDATION

Article 58.- Bank inspectorate

The People�s Credit Fund must submit to the inspection by the Bank Inspectorate according to provisions in Section 1, Chapter IX of the Law on Credit Institutions and other law provisions

Article 59.- Auditing

The auditing of People�s Credit Funds shall be carried out under the regulations of the State Bank.

Article 60.- Special control

The special control of the People�s Credit Funds shall be effected according to the provisions in Section 1, Chapter V of the Law on Credit Institutions, and the regulations of the State Bank.

Article 61.- Bankruptcy of People�s Credit Funds

After the State Bank has issued documents on non-application or termination of application of measures to restore the solvency of a People�s Credit Fund and the People�s Credit Fund system has applied all support measures but that People�s Credit Fund still loses its capacity to pay overdue debts, they may be declared bankrupt through procedures carried out by courts to settle the request for bankruptcy declaration according to the provisions of the legislation on enterprise bankruptcy.

Article 62.- Dissolution of People�s Credit Funds

A People�s Credit Fund shall dissolve in the following cases:

1. It voluntarily dissolves under the resolution of the members� congress if having capability to pay all its debts and getting the approval of the State Bank.

2. Its operation term has expired but the extension thereof is not applied for or the extension is rejected by the State Bank.

3. It is forced to dissolve by competent State bodies; its establishment and operation license is revoked by the State Bank.

Article 63.- Liquidation of People�s Credit Funds

1. In cases where People�s Credit Funds are declared bankrupt, the liquidation shall be effected according to law provisions.

2. Upon their dissolution, the People�s Credit Funds shall conduct the liquidation according to law provisions and under the State Bank�s supervision.

3. All liquidation-related expenses shall be borne by the liquidated People�s Credit Funds.

Chapter VIII

STATE MANAGEMENT OVER THE PEOPLE�S CREDIT FUNDS

Article 64.- Responsibility of the State Bank

The State Bank shall perform the State management over the People�s Credit Funds with the following principal contents:

1. Studying and drawing up strategic objectives, planning, orientation and plans for the development of the People�s Credit Funds throughout the country; directing and guiding the People�s Credit Funds to materialize them.

2. Promulgating legal documents on organization and operation of the People�s Credit Funds and guiding the implementation thereof.

3. Granting and withdrawing establishment and operation licenses of People�s Credit Funds.

4. Studying, elaborating and reviewing the realization of, the Party�s and the State�s policies towards the People�s Credit Funds; submitting to the Government the amendments and supplements to the policies, aiming to promote the development of the People�s Credit Fund system.

5. Elaborating and submitting to the Government for adoption or adopting according to its competence programs and/or projects with assistance and support from other countries and/or international organizations for the development of the People�s Credit Fund system; directing and inspecting the realization of such programs and/or projects.

6. Inspecting, examining People�s Credit Funds according to law provisions.

Article 65.- Responsibilities of ministries, branches

The ministries, the ministerial-level agencies and the agencies attached to the Government shall, within the scope of their tasks and powers, have to support and create favorable conditions for the People�s Credit Funds to operate.

Article 66.- Responsibilities of the People�s Committees of the provinces and centrally run cities

The People�s Committees of the provinces and centrally run cities (hereinafter referred collectively to as the provincial-level People�s Committees) shall perform the function of State management over the People�s Credit Funds according to the following contents:

1. Coordinating with the State Bank and concerned ministries and branches in directing and urging the People�s Credit Funds operating in their localities to observe the Law on Credit Institutions and other relevant legal documents.

2. Directing and supervising the granting and withdrawal of business registration certificates to/from local People�s Credit Funds and/or central People�s Credit Fund offices in their localities. Creating conditions for and assisting the People�s Credit Funds in handling problems arising in the course of their operation. Deciding on the forced dissolution of local People�s Credit Funds which have violated laws.

3. Settling complaints and denunciations and handling according to competence acts of law violation, protecting the legitimate rights and interests of the People�s Credit Funds and of their members.

4. Proposing amendments and supplements to policies for the development of the People�s Credit Funds.

5. Directing the People�s Committees of rural districts, urban districts, provincial capitals and towns to supervise and assist the People�s Credit Funds in the realization of plans for the consolidation and reorganization of their operations, and at the same time well performing the State management function according to law provisions with a view to ensuring the safe and efficient development of the People�s Credit Funds in the localities.

Article 67.- Responsibilities of the People�s Committees of rural districts, urban districts, provincial capitals and towns

The People�s Committees of rural districts, urban districts, provincial capitals and towns (hereinafter called collectively the district-level People�s Committees) shall perform the function of State management over the People�s Credit Funds according to the following contents:

1. Propagating, mobilizing and creating conditions for the formation and development of People�s Credit Funds in their localities.

2. Considering the proposals of the People�s Committees of communes, wards and district capitals so as to reply them in writing whether the setting up of People�s Credit Funds is approved or not.

3. Directing the concerned boards and branches in handling existing problems in the operation of the People�s Credit Funds.

4. Settling according to competence complaints, denunciations, violations of the legislation on the People�s Credit Funds; protecting the lawful rights and interests of the People�s Credit Funds within the scope of their assigned powers.

5. Directing the People�s Committees of communes, wards and district capitals to supervise and assist the local People�s Credit Funds in deploying the implementation of plans for operation consolidation and reorganization, and at the same time well performing the State management function according to law provisions with a view to ensuring the safe and efficient development of the local People�s Credit Funds in the localities.

Article 68.- Responsibilities of the commune/ward/district capital People�s Committees

The People� Committees of communes, wards and district capitals shall perform the State management over the local People�s Credit Funds set up and operating in their localities, according to the following contents:

1. Propagating, popularizing, guiding and creating favorable conditions for the setting up of local People�s Credit Funds in accordance with law provisions.

2. Considering plans for establishment and operation of local People�s Credit Funds put forth by the founding members; basing themselves on the provisions of law, replying the founding members in writing whether they agree on the setting up of the local People�s Credit Funds or not. In case of agreement, there must be written document proposing the setting up of the local People�s Credit Funds to the district-level People Committees.

3. Having to participate in consideration and posting of managerial cadres, controllers and executive officials of the local People�s Credit Funds, creating conditions for officials of the local People�s Credit Funds to work for a long term and with efficiency.

4. Directing concerned boards and branches in handling existing problems in the operations of the local People�s Credit Funds.

5. Supervising and assisting the local People�s Credit Funds in deploying the realization of plans on operation consolidation and reorganization and at the same time well performing the State management function according to law provisions with a view to ensuring the safe and efficient development of the People�s Credit Funds in the localities; being responsible for the consequences caused by collectives or individuals under their respective management to local People�s Credit Funds.

Chapter IX

COMMENDATION AND DISCIPLINE

Article 69.- Commendation

Organizations, individuals and People�s Credit Fund members that record outstanding achievements in building and developing the People�s Credit Funds, make many contributions to the efficient operation of the People�s Credit Funds shall be commended and/or rewarded according to the provisions of law.

Article 70.- Discipline

1. Those who violate the Charters and/or operation regulations of the People�s Credit Funds shall, depending on the nature and seriousness of their violations, be subject to reprimand, warning, expulsion from People�s Credit Funds, administrative sanction or penal liability examination; if causing damage, they have to pay compensations therefor.

2. Any organizations or individuals that take advantage of the name of the People�s Credit Fund to operate for the purpose of seeking personal profits, violate the legislation on monetary and banking operation, shall, depending on the nature and seriousness of their violations, be disciplined, administratively handled or examined for penal liability; if causing damage, they shall have to pay compensation therefor according to the provisions of law.

Chapter X

IMPLEMENTATION PROVISIONS

Article 71.- Adjustment upon the disparity between the Law on Credit Institutions and the Law on Cooperatives

In cases where this Decree fails to prescribe the contents which have been stipulated differently in the Law on Credit Institutions and the Law on Cooperatives, the provisions of the Law on Credit Institutions shall apply.

Article 72.- Adjustment of operation for People�s Credit Funds

As from the effective date of this Decree, within the time limits prescribed by the State Bank, each People�s Credit Fund shall have to readjust its operation area, organizational structure and operation contents in accordance with the provisions of this Decree and the State Bank�s legal documents guiding the implementation thereof.

Article 73.- Guiding the implementation

The State Bank Governor and the concerned ministries and branches shall have to guide matters which they must specify, as assigned to them in this Decree.

Article 74.- Implementation effect

This Decree replaces Decree No. 42/CP of April 29, 1997 of the Government and takes effect 15 days after its signing; all previous regulations contrary to this Decree are hereby annulled.

Article 75.- Implementation organization

The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the provincial/municipal People�s Committees shall, within the scope of their powers and responsibility, have to organize the implementation of this Decree.

On behalf of the Government

Prime Minister

PHAN VAN KHAI